Application of the Right of Withdrawal in Costa Rica: Convenience and Comparative Analysis With Spanish Legislation

Rolando García, lawyer in Costa Rica and expert in Commercial Law, shares with us this article on the right of withdrawal in Costa Rica. The right of withdrawal is regulated by Law 7472 and its regulations are limited to door-to-door sales. It allows consumers to rescind contracts within eight business days of their completion without any liability. This provision, an exception to the principle of Pacta Sunt Servanda, protects Costa Rican consumers. Unlike Spain, where there is a general regime covering all sales, in Costa Rica the right of withdrawal applies specifically to sales made outside the seller's commercial establishment.

I. INTRODUCTION

The right of withdrawal is regulated by the Law for the Promotion of Competition and Effective Consumer Protection, Law 7472, and its Regulations, Executive Decree No. 37899-MEIC. Specifically, the right of withdrawal is outlined in Article 40 of Law 7472, and Articles 130 to 135 of its Regulations, which deal with door-to-door sales. This study will be limited to the current consumer rights in Costa Rica, to subsequently analyze its convenience, similarities, and differences with the Revised Text of the General Law for the Protection of Consumers and Users of Spain.

The question arises: what right protects Costa Rican consumers to exercise withdrawal in sales that are not door-to-door? This is complemented by the question: is there a general regime of the right of withdrawal in the Costa Rican legal system? Article 40 of Law 7472, regarding door-to-door sales, is in Chapter V, Effective Consumer Protection. Therefore, its proper analysis is necessary to determine whether the right of withdrawal applies to other types of sales that are not door-to-door.

Theoretically, a conflict is identified between the right of withdrawal and the principle of Pacta Sunt Servanda. The right of withdrawal is considered an exception to the latter, as it enables the possibility of revoking the sale after the parties have agreed on the item and the price. Therefore, given its exceptional nature, the Costa Rican legislator has limited this unilateral rescission solely to door-to-door sales, to the detriment of the consumer for sales made directly in commercial premises, and as a guarantee for the seller for sales in their commercial premises.

II. RIGHT OF WITHDRAWAL IN THE COSTA RICAN LEGAL SYSTEM

The right of withdrawal1 has been defined as a guarantee for the consumer to change their mind and reverse the acquisition of a good or service within a period set by law, returning the acquired item and demanding a refund, without needing a specific reason to do so2. Its legal nature corresponds to a potestative right, in the sense that its exercise depends on the will of its holder, manifested through a declaration of intent subject to an expiration period3.

The right of withdrawal derives from the constitutional mandate set forth and in the fifth paragraph of Article 46 of the Political Constitution4, which establishes that consumers and users have the right to protection of health, environment, safety, economic interests, as well as the right to receive adequate and truthful information that supports freedom of choice and fair treatment. The legal framework explicitly incorporates this right in Chapter V, Effective Consumer Protection, Article 40 of Law 74725, which states:

Door-to-Door Sales. In door-to-door sales conducted outside the trader's or supplier's premises, provided that the nature of the goods allows it, the consumer, under the right of withdrawal, can rescind the contract without any liability within a period of eight days from its conclusion. (Underlining is not in the original text).

Although Law 7472 does not define the right of withdrawal, it enables the possibility of unilaterally rescinding the contract without liability for the consumer and establishes an expiration period of eight (8) business days, addressing the mentioned particulars. Subsequently, the content of the right is detailed in the Regulation to Law 7472. Article 130 of the Regulation6 addresses its execution mode, stating:

Term and Execution of the Right of Withdrawal. Within eight business days following the completion of the sale, the buyer may rescind the contract without liability. For these purposes, they must send a written notice to the seller's address, fax number, or email address specified in the stationery or contract, ensuring proof of delivery or sending. Unless the seller refuses or makes it impossible to obtain such proof, in which case the consumer may prove their diligence through other means of evidence provided in article 298 of the General Law on Consumer and User Protection (LGAP)7.

The consumer may also personally appear at the merchant's domicile with the purchased product, if already in their possession.

The right of withdrawal will be considered properly exercised if it is shown that the consumer acted in a timely manner, even if the notification does not reach the seller due to an inaccurate, erroneous, or nonexistent address stated by the seller on the invoice. (Underlining is not in the original).

Article 131 of the Regulation enables the right of withdrawal for the sale of services, provided that the services have not been effectively provided. In cases where services are agreed upon in installments, withdrawal is only enabled for the part not yet performed before receipt of the notice of withdrawal, obligating the consumer to pay for the part already received. Articles 132 and 133 of the Regulation establish the obligations of the buyer and the seller, respectively.

Buyer's Obligations: If the buyer has already received the purchased goods, they must return them unused and in the same condition in which they were delivered, including their packaging, accessories, and accompanying literature. In all cases, the original invoice or proof of payment must also be returned.

Seller's Obligations: The merchant or supplier will have a maximum period of eight calendar days to refund to the buyer all amounts received, for which they must issue the corresponding receipt.

The specified period shall begin from the day following receipt of the rescission notice, unless the buyer already has possession of the goods, in which case it shall begin from the day following their return.

Unless agreed otherwise by the parties, the refund shall be made at the seller's domicile and in cash.

Transactions conducted through electronic commerce shall be subject to the provisions of Article 40 of Law 7472 and this regulation. In any case, the consumer's right of withdrawal must be exercised through the same means used by the consumer to express consent, and the refund of all amounts received shall be made through the same means used for payment.

In the absence of agreement, the consumer may resort to the National Consumer Commission (CNC)8.

Article 134 states that if the buyer gives notice of rescission but subsequently receives the purchased goods in person, final ratification of the transaction is presumed, and the right of withdrawal is considered not exercised. This provision allows for exceptions in cases of errors or contrary evidence. Lastly, but not least, Article 135 of the Regulation details exceptions to the right of withdrawal:

Exceptions to the Right of Withdrawal: The right of withdrawal shall not apply in the following cases:

a) In the case of goods that are consumable, perishable, or cannot be resold once installed or used due to their nature.

b) When the goods subject to the contract are to be tailored or custom-made or imported upon special order according to the buyer's specific needs; if the seller demonstrates that upon receiving the rescission notice, the goods had already been tailored or prepared, or an irrevocable purchase order had been sent to the foreign supplier.

If the goods are in the process of being manufactured or prepared, or if these tasks have only been partially completed, the buyer may exercise the right of withdrawal by paying the seller for the value of the work already done. Additionally, if the import order is revocable, the buyer must cover the expenses incurred in both placing and revoking the order.

Merchants selling such goods must inform the consumer of the limitation to exercise the right of withdrawal within the contract, if not stated otherwise in another document.

The right of withdrawal in the Costa Rican legal system can only be exercised in door-to-door sales and its modalities: door-to-door sales, sales outside the commercial establishment, distance sales, sales via television and radio, sales by catalog, and online sales9. There is no general regime for consumer rights, unlike in other jurisdictions, as will be discussed in Section IV.

III. CONVENIENCE OF THE RIGHT OF WITHDRAWAL VS PACTA SUNT SERVANDA PRINCIPLE

According to Montero Piña (1999), a contract exists when two or more persons agree on a common declaration of will be intended to regulate their rights10. According to the Costa Rican Civil Code11, agreements made within the framework of contracts are binding between the contracting parties (principle of Pacta Sunt Servanda), obligating both what is expressly stated and the consequences that equity, custom, or law give rise to from the obligation. Diéguez Oliva argues that the unilateral withdrawal right of withdrawal does not fit into the usual modes of extinguishing obligations, and its acceptance in this regard is understood under its exceptional and extraordinary nature12.

European doctrine has justified the exceptional nature of the right of withdrawal based on premises such as defects of consent in situations where the consumer had limited opportunities to compare prices and alternatives, or the need to allow periods for accessing more information and data that enable the consumer to decide whether to remain in the contract13. According to Diéguez Oliva, the purpose of the right of withdrawal is to offer consumers an effective way to terminate the contract without having to resort to other legal means; it also responds to economic situations by incentivizing consumption14.

The statement of reason in the Regulation to Law 7472 does not directly reference the right of withdrawal. However, Consideration V of this regulation addresses the Costa Rican state's interest in ensuring that the legal framework provides the highest degree of certainty.

The statement of reason in the Regulation to Law 7472 does not directly reference the right of withdrawal. However, Consideration V of this regulation addresses the Costa Rican state's interest in ensuring that the legal framework provides the highest degree of certainty and clarity for the governed. The convenience of the right of withdrawal in the legal system aligns with the objectives and purposes of Law 7472, specifically the effective protection of consumers' legitimate rights and interests, their safeguarding, and the promotion of competitive and fair market processes. Given its exceptional nature, the Costa Rican legislator has limited this unilateral rescission to door-to-door sales. Conversely, this limitation adversely affects consumers in commercial premises and serves as a guarantee for the seller in their local sales.

IV. THE RIGHT OF WITHDRAWAL IN THE CONSOLIDATED TEXT OF THE GENERAL LAW FOR THE PROTECTION OF CONSUMERS AND USERS

Royal Legislative Decree 1/2007, of November 16, which approves the consolidated text of the General Law for the Defense of Consumers and Users, came into effect on December 1, 200715. Regarding the right of withdrawal, the instrument establishes a general regime (Articles 68 to 79) and a special regime for distance and off-premises contracts (Articles 102 to 108).

The general regime is in the First Book of the text, which deals with General Provisions. The right of withdrawal is considered a basic right of the consumer and user, its main effect being the automatic and cost-free termination of the contract, which entails the reciprocal restitution of all considerations. The exercise of the right is not subject to formalities, and clauses imposing penalties for its exercise are null and void. The regime serves a supplementary function in the absence of provisions in the offer, promotion, publication, or contract, and also imposes duties of information16 and documentation17 on the entrepreneur.

The minimum period to exercise the right is 14 calendar days under the general regime. Although there is no explicit penalty in the text, the entrepreneur's failure to fulfill their information and documentation duties results in an automatic extension of the expiration period up to 12 months, counted from the end of the original period to exercise the right. The burden of proof regarding the exercise of the right of withdrawal lies with the consumer and user. If the consumer and user are unable to return the consideration due to loss, destruction, or other causes not attributable to them, this does not deprive them of their right to exercise the withdrawal. If it is attributable to them, the consumer and user shall be liable for the market value that the consideration would have had at the time of exercising the right or the acquisition value, whichever is lower.

The special regime is aimed at contracts concluded at a distance and contracts concluded outside the business premises. The main difference from the general regime is the extension of the period for exercising the right, from 14 calendar days to 30 calendar days, in cases of unsolicited visits by the entrepreneur to the consumer's or user's home or organized excursions by the entrepreneur to promote or sell goods or services. A detailed list of specific situations where the right of withdrawal is excluded is established, such as the provision of services once the service has been executed.

Like the general regime, the special regime penalizes the omission of information about the right of withdrawal by the entrepreneur, which results in the extension of the expiration period to 12 months after the initial period's expiration date. Regarding the entrepreneur's obligations under the special regime, they must reimburse all payments received from the consumer and user, including delivery costs or any other costs, before the period has elapsed. The main obligation of the consumer and user when exercising their right is to return or deliver the acquired goods to the entrepreneur, or if not possible, to an authorized person, no later than 14 calendar days from the communication of their intention to exercise their right.

V. COMPARATIVE ANALYSIS BETWEEN SPANISH AND COSTA RICAN LEGISLATION

The main difference in the application of the right of withdrawal between the Costa Rican and Spanish systems is that the latter has a general regime applicable to all sales, including sales within commercial establishments, while in Costa Rica it is only applicable to door-to-door sales and their modalities. Although the Costa Rican system allows for the return of goods or services due to compliance with quality standards and technical requirements (health, environment, or safety), the execution of the right of guarantee is not comparable to the right of withdrawal, as breaking the contract would entail responsibility for the user if the parties have agreed on the item and price.

In the Spanish regime, consumers have a period of fourteen (14) working days in the general regime and thirty (30) calendar days in the special regime to exercise the right of withdrawal, while the Costa Rican system grants consumers eight (8) working days. The Spanish regime penalizes the entrepreneur who fails in their duty of information and documentation by extending the expiration period to twelve (12) months to exercise the right, while the Costa Rican system does not provide any penalties, except for the consumer's right to approach the National Consumer Commission (CNC).

Among the similarities shared by the mentioned systems are the same exceptions regarding the exercise of the right of withdrawal for those services that have been effectively consumed, consumable goods, and personalized goods or services. Both legislations detail the obligations of the parties, especially the obligation to return the considerations of the sale.

VI. CONCLUSION

Currently, there is no specific right that protects Costa Ricans to validly exercise withdrawal in non-doorstep sales. Unlike the general regime that governs businesses, consumers, and users in Spain, there is no general regime for the right of withdrawal in the Costa Rican system. Despite Article 40 of Law 7472 being in Chapter V Effective Consumer Defense, it cannot be interpreted that this article extends to other sales not conducted at home.

The right of withdrawal is an exception to the principle of Pacta Sunt Servanda, and given its special nature, the Costa Rican legislature has limited the unilateral termination of doorstep sales. Doctrine has grounded such limitation on defects in consent due to consumers having less access to compare prices, offers, information, and other data that enhance will in the purchase.

Despite its extraordinary nature, Costa Rican consumers are at a disadvantage compared to the rights enjoyed in other jurisdictions. This includes Spain's general regime with longer expiration periods and penalties for businesses that fail in their duty of information and documentation. There should be consideration of whether it is advisable to extend the right of withdrawal to a general regime applicable to sales made directly in commercial premises.




The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.

 

Bibliography:

 

1. Also known as the right of withdrawal in other jurisdictions, such as the Spanish one.

2. Nelson Ulloa, Johana. 2017. The right of withdrawal in consumer matters in the Costa Rican legal system: its regulation and proposal for a legal reform in accordance with modern consumer law doctrine. Retrieved from: http://repositorio.sibdi.ucr.ac.cr:8080/jspui/handle/123456789/5626

3. Diéguez Oliva, Rocío. 2009. The Right of Withdrawal in the Common Frame of Reference: https://indret.com/wp-content/themes/indret/pdf/630_es.pdf

4. National Constitute Assembly. 1949. Political Constitution of the Republic of Costa Rica. Retrieved from: https://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?nValor1=1&nValor2=871

5. Legislative Assembly of the Republic of Costa Rica. 1994. Law 7472, Promotion of Competition and Effective Consumer Protection. Retrieved from: https://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?nValor1=1&nValor2=26481

6. Ministry of Economy, Industry and Commerce. 2013. Regulation to the Law of Promotion of Competition and Effective Consumer Protection. Retrieved from: https://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=75696&nValor3=132906&strTipM=TC

7. Article 298 of the General Law of Public Administration (LGAP) states: 1. The means of proof may include all those permitted by public law, even if they are not admissible under common law. 2. Unless otherwise provided, evidence shall be evaluated in accordance with the rules of sound judgment.

8. The abbreviation for "Comisión Nacional del Consumidor" (CNC) translates to "National Consumer Commission

9. Nelson Ulloa, Johana. 2017. The right of withdrawal in consumer matters in the Costa Rican legal system: its regulation and proposal for a legal reform in line with modern consumer law doctrine. Retrieved from: http://repositorio.sibdi.ucr.ac.cr:8080/jspui/handle/123456789/5626

10. Montero Piña, Fernando. (1999). Obligaciones. 1st Ed. San José, Costa Rica: Premiá Editores.

11. Legislative Assembly of the Republic of Costa Rica. 1887. Civil Code. Retrieved from: https://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?nValor1=1&nValor2=15437

12. Diéguez Oliva, Rocío. 2009. The right of withdrawal in the common frame of reference. Retrieved from: https://indret.com/wp-content/themes/indret/pdf/630_es.pdf

13. Study Group on a European Civil Code and Acquis Group: Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference, p. 58, cited in Diéguez Oliva, 2009. The effective way to dissociate from the contract, without having to resort to other legal means, also considers that it responds to economic situations in the sense of incentivizing consumption.

14. Diéguez Oliva, Rocío. 2009. *The Right of Withdrawal in the Common Framework of Reference*. Retrieved from: https://indret.com/wp-content/themes/indret/pdf/630_es.pdf

15. Ministry of the Presidency. 2007. Royal Legislative Decree 1/2007, of November 16, which approves the consolidated text of the General Law for the Defense of Consumers and Users and other complementary laws. Retrieved from: https://www.boe.es/buscar/act.php?id=BOE-A-2007-20555

16. The entrepreneur must inform in writing in the contract, in a clear, understandable, and precise manner, about the possibility of exercising the right of withdrawal.

17. The entrepreneur must provide a withdrawal document, indicating the name and address of the person to whom it should be sent, as well as the identification details of the contract and the contracting parties.